CRAINSNEWYORK.COM I MARCH 25, 2024
Property tax system could get overhaul A revived suit alleges rental properties face a higher burden than owned homes
JASON MCGREGOR PHOTO COMPOSITE ILLUSTRATION
By Eddie Small
LAW FIRMS LIFT OFFICE MARKET They don’t pay top-dollar rents or seek out penthouse space, but they do fill up middle and lower floors of buildings | By Aaron Elstein In good times or hard times, lawyers always win. Revenues at the top 100 firms rose to $131 billion in 2022, the most recent year available, from $7 billion in 1986, a 19-fold increase, according to American Lawyer. Profit margins never fell below 35% in even the worst years and hit a record 45% in 2021. For comparison’s sake, Apple’s operating margin last year was 34%. Now lawyers are winning the
BY THE NUMBERS
65%
Law firms’ average daily office attendance, behind only real estate
office-space game, too: Law firms are historically reliable but not exactly sexy as office tenants, compared to the flashier and pricey deals in recent years signed by tech and finance companies. But several of the biggest deals over the last year involve law firms, and with Manhattan office landlords scrambling for tenants, members of the bar are enjoying their unlikely new status as belles of the ball.
The city’s much-maligned property tax system could be headed for a major overhaul. The New York Court of Appeals, the highest court in the state, revived a 2017 lawsuit from the advocacy group Tax Equity Now New York challenging the byzantine system in a 4-3 ruling issued March 19. Tax Equity, a coalition of property owners, renters and economic justice organizations, had argued in its suit against the city and the state that property taxes in the city place a higher burden on rental properties than owned homes, violating the state’s real property tax law. The group also said that real estate in districts where most residents are people of color are overtaxed, violating the federal fair housing law. The Court of Appeals ruled that both of these arguments against the city can proceed “on the general basis that the system is unfair, inequitable and has a discriminatory disparate impact See TAX on Page 22
“It’s nice that the Knicks are good again because brokers are inviting me to all the games,” said one partner in charge of his firm’s real estate needs. Law firms typically don’t pay top-dollar rents, or seek out penthouse space, but they soak up space in the middle or lower floors of buildings, helping landlords balance their books. At 55 Hudson Yards, a 51-story tower, the top three floors are leased by hedge fund Third Point at $137 a square foot, according to KBRA data. Below that comes private equity firm Silver Lake, paying $111 per square foot under a lease inked in 2017. Next comes See LAW on Page 19
New York apartments | BLOOMBERG
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